When the news broke late on Wednesday in Moscow, Russian and western media trumpeted it as the energy deal of the year: Glencore glncy, the world’s biggest commodities house, and the Qatar Investment Authority had agreed to buy a 19.5% stake in Rosneft, Russia’s national oil champion, for 10.5 billion euros ($11.1 billion).

Glencore–so the narrative went–was returning to its dealmaking roots, starting to grow again after two years of brutal retrenchment to cut a crippling debt burden. (For more on that retrenchment, read this recent Fortune feature.) Russia, meanwhile, had broken its international isolation by attracting major foreign investors, filling a gaping hole in its budget.

But while the numbers are certainly big enough to justify the billing, the deal is almost certainly not what it appears at first sight–and the still-murky reality of it most likely has as much to do with geopolitics as with business.

For starters, the two sides of the deal are saying very different things about it. In a televised excerpt of a meeting between the two, President Vladimir Putin “congratulated” Rosneft’s powerful CEO Igor Sechin on the “completion” of a deal worth 10.5 billion euros. (Sechin has been the power behind Putin’s throne ever since he orchestrated the Russian government’s seizure of Yukos from the oligarch Mikhail Khodorkovsky 13 years ago.)

However, Glencore yesterday said it is only in “final-stage negotiations”of a deal that it expects to close in mid-December, and that the value is only 10.2 billion euros.

Sechin told Russian media that the two buyers would contribute equally to the deal. But Glencore, under London Stock Exchange reporting obligations, said it would only contribute 300 million euros in equity (taking a tiny equity interest of 0.54%, and even that only “indirectly”), while the rest of the money was provided by “QIA and by non-recourse bank financing,” the latter being a loan that effectively insulates Glencore against most of the risks of owning Rosneft shares.

What is clear is that one part of the deal–a five-year agreement to trade 220,000 barrels a day of Rosneft’s oil–will restore Glencore to the position of the world’s biggest trader of Russian crude. Analysts at Bank of America Merrill Lynch, in a back-of-the-envelope calculation, speculate that, if it can make $1 a barrel on that flow, Glencore will earn $400 million over the five years–”a very compelling return on $323 million in equity.”

One oil trading executive that Fortune spoke to reckoned that such a profit margin “sounds high,” but that everything depended on the deal’s pricing formula. Either way, he noted, securing such huge volumes of oil for its trading operations was a “huge” achievement for Glencore.

But if Glencore isn’t providing the 10 billion euros, who is? QIA hasn’t commented and didn’t respond to a request for comment from Fortune. Neither did Italy’s Banca Intesa SanPaolo, which Fortune understands to be the arranger of the financing.

In recent weeks, Moscow bankers had speculated that Rosneft would have to buy the shares from the government’s holding company itself, because it wouldn’t be able to find a foreign buyer. And indeed, Rosneft this week raised some $9.4 billion through the sale of local currency bonds, at a time when it has no other conceivable use for such a huge pile of cash.

No-one at Rosneft was available to comment Friday. (Fortune will update this article to reflect any later responses from the parties involved.)

Cynics suspect that the investors who took Rosneft’s paper are just other state-controlled Russian institutions who will dump the bonds at the Central Bank in due course. If the Central Bank creates money to refinance the bonds, then it will, effectively, be printing money to fund the government’s budget deficit. But the Kremlin is afraid of doing that openly: the ruble nearly collapsed two years ago when Rosneft used a similar trick to refinance its $55 billion acquisition of TNK-BP.

A Central Bank spokeswoman told Fortune Friday that its board hasn’t yet approved Rosneft’s bonds as eligible collateral for its credit, and that it’s not clear when it will take any such decision.

But it’s unthinkable that anyone in Russia will try to stop the deal going through. Only a month ago, Economy Minister Alexey Ulyukayev was sensationally arrested after trying to stop Rosneft buying another oil producer, Bashneft. Ulyukayev has been accused of extorting a $2 million bribe from Rosneft to approve the deal.

One final aspect of the deal also has heads spinning. Moscow has accused Qatar and other Gulf governments (notably Saudi Arabia) of supporting “terrorists” in Syria and rebels in other countries affected by the Arab Spring. That Moscow would sell a big chunk of its crown jewel (below market) to such a buyer illustrates how badly it needs the money.

“Qatar and Russia may have been opposing sides on the battlefield in Syria but have significant mutual interests elsewhere, including gas production in particular,” said Emad Mostaque of the London-based consultancy Ecstrat. “Russia is stepping into the vacuum left by the U.S. in the Middle East, and it makes sense for Qatar to build stronger relationships as a result.”

Why Europe’s Central Bank Claims Its Taper Isn’t One

ECB President Mario Draghi couldn’t have been more dovish about tightening Eurozone policy for the first time in five years if he’d wanted to.

Yes, the ECB will cut the flow of stimulus to the Eurozone economy through the bond markets. Instead of pumping in 80 billion euros ($85 billion) a month through the bond markets, it will, as of April, only pump €60 billion. But it extended the program for nine months (to the end of 2017) instead of only the six months that markets expected, guaranteeing a minimum of €540 billion in stimulus as opposed to the €480 billion (€80 billion for six months) expected. As he said repeatedly during the press conference after the ECB’s governing council meeting, the bank will be a “presence” in the markets for a long time, pushing bond prices up.

Then there was the thoroughly asymmetric guidance. Purchases can be ramped up again if the outlook continues to disappoint, Draghi said. But he shot down suggestions they could be reduced further if growth and inflation pick up. That’s fair enough, given that the ECB’s base case assumes that inflation will still be undershooting in 2019, at only 1.7%, and that economic risks are still tilted to the downside.

The language used during the question and answer session was also important, as Draghi doesn’t usually bend English to suit his purpose. But he jumped on anyone who dared to use the word ‘taper,’ because of the associations it has with the Fed’s gradual exit from its extraordinary stimulus program. In Draghi’s dictionary, a ‘taper’ can only mean a reduction in purchases to zero, and nobody talked about that at today’s governing council meeting, he stressed. In the markets, of course, the word ‘taper’ invites the word ‘tantrum’–the violent bond market sell-offs that happened when the Fed started talking about a new policy cycle. The ECB doesn’t want that, not with Greece, Portugal and, most worryingly, Italy still stuck in their respective ruts.

Finally, there was a key tweak to the bond-buying program. The ECB will, if need be, buy bonds that are yielding less than its deposit rate of -0.4%. That removes the floor underneath benchmark (German) bond yields, widening a differential that will encourage people to sell the euro and buy pretty much anything else. German two-year bonds are now retesting record low yields at -0.73%.

The euro is now back near its lowest since 2003. Source: ECB

John McIntyre, a portfolio manager at Brandywine Investment Management in Philadelphia, says it all points to the ECB trying to create what bond market wonks call a ‘steep yield curve’–a big differential between short- and long-term rates. Typically, that’s associated with higher growth and inflation. The big premium on U.S. bonds (two-year Treasury notes now pay over 1.8 percentage points more than German ones) helps to explain why the euro lost two cents against the dollar on the news. Dollar-euro parity looms into view for the first time in over a decade. McIntyre points that it may not be till the end of next year, given how far the dollar has risen in 2016, and that any fiscal stimulus planned by the new Trump administration won’t be immediate.

Fundamentals also count: The Eurozone’s current account surplus is running at nearly 4% of GDP—the world’s largest macroeconomic imbalance.

But if the euro isn’t cheaper than a dollar this time next year, it won’t be because Frankfurt wasn’t trying.

The European Central Bank Will Start to ‘Taper’ Its Bond Purchases in April

The European Central Bank said it will start “tapering” its monetary stimulus to the Eurozone already in April 2017, cutting its monthly bond purchases by a quarter to 60 billion euros from 80 billion.

This decision comes as a shock to financial markets, which expected the ECB to carry on with its “quantitative easing” at its current pace for some months. However, the shock was mitigated by the ECB also announcing that it would extend its purchases for nine months to the end of 2017.

“From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim,” the bank said in a statement following a regular meeting of its governing council in Frankfurt.

The ECB also, as expected, left its key deposit rate unchanged at -0.4%, with its refinancing rate and marginal lending rates staying at 0% and 0.25%, respectively.

Financial markets didn’t immediately know what to make of the announcement. The euro spiked against the dollar initially, reacting to what it thought was a tightening of monetary policy. However, it quickly turned around and was trading around a quarter of a cent lower than its pre-meeting level within 10 minutes.

ECB President Mario Draghi will shed more light on the decisions at his regular press conference later, starting at 8:30 a.m. EST

Draghi is likely to face intensive questions about the effect of Italy’s political turmoil in the wake of the weekend referendum on the government’s attempts to clean up a banking system clogged with hundreds of billions of euros in bad debts.

The Financial Times reported Thursday that the Italian Treasury had asked for another month to recapitalize Banca Monte Paschi di Siena, the country’s third-largest bank by assets and the bank that fared worst in this year’s EU stress tests.

The ECB wanted Monte dei Paschi’s recapitalization to be completed by the end of the year. But the resignation of Italian Prime Minister Matteo Renzi has created a political vacuum in Rome, frightening potential investors off a sale of new shares in the bank.

Italy’s bond market didn’t like the news from Frankfurt at first sight. The yield on the benchmark 10-year Italian bond rose from 1.97% to 2.03% on the prospect of reduced buying from the central bank.

The Tuscan bank, founded during the Renaissance, is looking to raise 5 billion euros ($5.4 billion) this month to avoid being wound down, but investors are reluctant to commit funds after Renzi’s referendum defeat left a political vacuum. Renzi has said he will quit, but the country’s head of state asked him to put his resignation on hold until parliament has approved the 2017 budget. That could be done as early as Friday.

One person familiar with the matter said the bank was looking at the idea of a so-called precautionary recapitalisation, which would involve the government injecting cash.

Two other sources said a government decree authorising the state recapitalisation was ready, with its implementation depending on political developments in the next few days.

An injection of cash by the state would first require losses for institutional investors who hold the bank’s junior debt, according to EU banking rules. The bank’s finance chief, Francesco Mele, had hinted at such an outcome already last week. The Treasury and MPS weren’t immediately available for comment.

Retail investors who hold 2.1 billion euros of the bank’s subordinated bonds would be either spared or reimbursed, according to a person familiar with the matter.

Retail investors hold nearly two-thirds of MPS’s subordinated debt, and many claim that the bonds were sold to them as being essentially as safe as deposits, even though they weren’t covered by the country’s deposit protection scheme.

The reports have pushed the bank’s shares close to a new all-time low Tuesday morning in Milan. However, the prospect of Rome and Brussels co-operating to avoid a disorderly resolution of Monte dei Paschi has lifted the shares of all of Italy’s other large banks. While MPS was down 3.4% by lunchtime, others were up as much as 3.9%.

Sources said Monday banks working on backing the planned 5 billion euro cash call had decided to wait three to four days until the political situation was clearer. Under the terms of their involvement, they can drop the transaction due if market conditions are too rough.

Monte dei Paschi, rated the weakest lender in European regulatory stress tests this summer, had planned to secure a firm commitment from one or more ‘anchor’ investors and launch a share sale as early as Wednesday.

The lender said Monday that investors had offered to swap up to a 1.029 billion euros in debt for new shares, in the crucial first plank of its rescue plan.

What Italy’s ‘No’ Vote Means for the Euro and Banks

This weekend, Italian voters shot down a constitutional change aimed at creating a stronger government, but would have also had the immediate impact of bolstering Italy’s current leadership. The result appears to be another example of voters wanting to punish those in power, even in the absence of obvious alternatives. Already, the vote has thrown European markets into turmoil, with the value of Italian bonds tumbling.

And it will leave Italy without a prime minister for now. Prime Minister Matteo Renzi had called the referendum and made it into a personal vote of confidence. Following the vote, Renzi announced that he would step down.

Here’s what you need to know about what happens next?

Is this another victory for populists against the political establishment?

Not entirely. All of Italy’s political parties, with the exception of Renzi’s center-left Democratic Party, were lining up to vote ‘No’ for various reasons. Some just wanted to be rid of Renzi, others believed that the planned reform would concentrate too much power in the government and remove valuable checks and balances. The one theme that united them is that they all preferred the status quo.

So – there’s no connection to the Trump/Brexit phenomenon?

Less than meets the eye. But for sure, Italy is a country with high unemployment, weak economic growth, a big problem with immigration and refugees, and plenty of resentment for the political elite. So there are many reasons for Italians to vent at whoever is in power, even if Renzi has done more to address those problems than most in recent memory.

Does the ‘No’ vote mean that Italy leave the Eurozone?

Not in the near term, at least. The euro dipped quite sharply when the result was published, because the margin of Renzi’s defeat was much larger than expected. But it’s now trading above its Friday close against the dollar, because the worst case-scenario, which could include snap elections won by a single-party, anti-euro government like the populist 5 Stars Movement, still looks very unlikely. A big majority of Italians want to keep the euro. The longer term looks a lot worse, though.

How so?

Because a period of political paralysis is very bad news for the banks on which the economy depends for finance. And Italy’s banks are already in bad shape. Over half a dozen of the biggest are in the middle of recapitalizations or mergers aimed at adding enough financial footing to tackle a collective pile of 200 billion euro ($214 billion) in bad loans. At least some of those work-outs will need government backing. And the referendum puts up for questions whether the banks will get that. To illustrate, the top 7 losers on the Milan stock exchange this morning were all banks, down by between 3.1% and 7.3%.

Are they going to collapse?

The chance of that just went up. And some drastic emergency measures could soon become necessary to stop it happening. The most acute problem is that an effort to raise 5 billion euro ($5.4 billion) in additional capital for the country’s third-biggest bank, Monte dei Paschi di Siena, is likely to fail. That will make it harder to get similar deals done. If Monte dei Paschi di Siena can’t get the money from private investors, then either it will need a taxpayer-led bailout or it will have to ‘bail in’ its junior bondholders, turning their relative safe bonds into more risky, and likely lower valued, shares of the bank. The first would break the EU’s new rules on bailouts, and, in Italy’s case, possibly budget deficits too. The second would be political dynamite, given that nearly two-thirds of MPS’s junior debt is held by individual investors, many of whom thought their savings were protected.

Are other banks at risk too?

Not to the same extent, and the two most significant Italian banks–Intesa Sanpaolo iitsf and Unicredit uncff–are among the nation’s strongest. But for many other smaller banks, there are few alternatives to swapping debt for equity, and burning investors as they write off their bad loans. It is, in the parlance, a systemic problem, and there is a clear risk of contagion. Fortunately for Italy, the European Central Bank’s quantitative easing program is likely to keep the market-related risks within limits by continuing to buy up large amounts of Italian bonds. The ECB’s Mario Draghi is holding a press conference on Thursday, which is likely to closely watched by bank investors.

But who is going to run Italy now?

Renzi is submitting his formal resignation to President Sergio Mattarella today. The national executive of Renzi’s Democratic Party is likely to start a search for a new leader Tuesday. Mattarella is expected to build a new government on the basis of the existing Chamber of Deputies, the lower house of Italy’s legislative branch. The new government may be led by whoever succeeds Renzi as head of that party, or by a non-partisan group of technocrats. Italy has more and more resorted to technocratic governments in recent years as consensus-driven politics broke down. Economy Minister Piercarlo Padoan, a former International Monetary Fund Director, and anti-graft magistrate Piero Grasso have been mentioned as possible caretaker Prime Ministers.

Are you seriously suggesting that a G-7 country’s answer to the crisis of legitimacy in western democracy is another government of unelected officials?

Errrr, ummm…Have you got a better idea?

But how would they deal with a banking crisis?

They’d struggle. They may have to seek the kind of Eurozone/IMF-funded bailout that Spain got in 2012. That recapitalized the banks in return for thorough reforms both of the banking sector, and of economic policymaking. If the past is any guide, the pro-European Italian mainstream will explore this option before they risk fresh elections and handing over power to the 5 Stars Movement. Either way, the public will get to deliver its verdict no later than 2018, when the next general election is due.

Here’s Why Italy’s Zombie Banks Should Be Terrified About a ‘No’ Vote In Renzi Referendum

Italians might end up saying “Ciao,” to their country’s recent economic resurgence this weekend, but they won’t be saying, “Buona sera,” to the Eurozone.

Clearly, there is a lot at stake for Prime Minister Matteo Renzi when Italians head to the polls to vote in this weekend’s constitutional referendum, which takes place on Sunday. The outcome could could blow the country’s tentative recovery off course and make it harder to keep the EU’s signature integration project alive. But there might be less at stake than it appears.

That’s because even a ‘No’ vote—which is what the polls have been suggesting Italian voters will side with—would, analysts say, probably leave the country largely where it is now: Unlikely to form a mold-breaking single-party government and still banned, by its constitution, from holding a referendum that would take it out of the single currency area.

The trouble for Italy is that ‘business as usual’ isn’t an option if it wants to share a currency with Germany, the Netherlands, and others for the next 50 years. It needs Renzi’s reforms to allow urgent repairs to its zombified financial system that would let its economy breathe. As the chart below illustrates, Italy is hardly any better off than Greece after 17 years of euro membership. It just didn’t have the same pre-crisis boom.

Financial markets have become decidedly jittery in the past month at the prospect of a “No” vote. After the Brexit referendum and Donald Trump’s election victory, investors seem in no mood for another country to throw out economic orthodoxy and consensus politics in search of a radical answer to the ills of the modern world.

The premium demanded by investors for holding 10-year Italian government debt—a reliable indicator of political risk—soared in November to as much as two percentage points over comparable German bonds. Admittedly, that’s nowhere near the levels of its crisis in 2012. Then, spreads—the difference between the interest rates on similar bonds from the two countries—rose to over five percentage points. Even so, two percentage points is enough to revive concerns about how the country will carry a debt burden that is already higher, proportionately, than Greece’s was in 2009. Italy’s budget deficit is still too wide for the Eurozone’s rules. It’s not clear how it would finance higher servicing costs that come with higher interest rates on over 2 trillion euros of public debt.

Spreads have narrowed in the past couple of days, as markets have absorbed that the referendum is no ‘Brexit’ moment. But a ‘No’ will still have negative consequences in the near term.

According to Nicola Nobile, an economist with Oxford Economics in Milan, the first casualty is likely to be the 5 billion euro ($5.3 billion) recapitalization of the country’s third-largest bank by assets, Banca Monte dei Paschi di Siena, which failed the ECB’s stress test in July. If that fails, then other planned mergers and recapitalizations planned will also be harder to achieve, and the economy will continue to hobble along, starved of credit.

Renzi had been counting on the Monte dei Paschi recap injecting some momentum in the process of clearing up nearly 200 billion euros ($212 billion) in bad loans that clog the balance sheets of Italy’s banks. As Merler notes, MPS is the elephant in the room, with 35% of all loans classified as ‘non-performing’.

MPS is currently trying to persuade bondholders to swap their holdings for shares. A second step involves a big issue of new shares, preferably with an ‘anchor investor’ (such as Qatar’s sovereign wealth fund) taking a large bloc. But investors will be hard to find if the referendum leaves the country without a government, says Nobile, and that would force Rome to carry out a highly sensitive ‘bail-in’ of junior bondholders, including many small-scale retail investors to complete the recap.

Under new European rules, governments are required to impose losses on shareholders and junior bond-holders before they inject taxpayer money into a struggling bank. But when Renzi tried that out on a smaller bank last year, the suicide of a ruined pensioner and other stories of hardship caused such an outcry that he beat a hasty retreat. It’s hard to see who would dare repeat the experiment if Renzi loses and resigns.

The question would then become whether the EU authorities and other governments, notably Germany’s, would be willing to bend their new rules to spare a new and weak Italian government the pain of an explosive round of bail-ins.

“A protracted period of political uncertainty after a ‘No’ vote could exacerbate the Italian banking issues, unsettle the Italian bond market, and weigh on business and consumer confidence,” says Holger Schmieding, chief economist with Behrenberg Bank in Berlin.

The populist and unpredictable ‘5 Stars Movement,’ as well as the anti-euro Lega Norde of Matteo Salvini, are waiting to exploit any failure of Renzi. As such, says Schmieding, “a political crisis could open up a bigger can of worms in Italy than it would elsewhere.” And that is never good for economic growth.

Airbnb Is Appeasing City Regulators With Rental Limits

Home-sharing firm Airbnb said it will for the first time impose fixed limits on the number of nights a year that hosts can rent out their homes through its site in Amsterdam and London.

It’s a move that is in keeping with other recent efforts by Airbnb to mollify regulators who have pushed back strongly against the company and its business model over concerns that short-term rentals make housing opportunities for longer-term residents scarcer and more expensive.

As of January, the company will automatically block hosts in Amsterdam from renting out entire homes for more than the legal limit of 60 days a year, unless they have a license to do so. It will apply the same principle in London, where the legal limit is 90 days.

The rule could be a template for cities in the U.S. and elsewhere, according to The Wall Street Journal. It quoted James McClure, Airbnb’s general manager for northern Europe, as saying that, “The new measures are an example to the world.”

The measures don’t appear to directly address the issues Airbnb is facing in cities such as San Francisco and New York, but they could form part of a longer-term peace deal with them. San Francisco enacted an ordinance in October to force hosts to register with the city authorities, and restricted them to listing no more than one property. Earlier this week, the Board of Supervisors voted to approve a 60-night annual limit on such rentals. Meanwhile, New York passed a law banning the advertising of short-term rentals of less than 30 days.

Airbnb argues that cities are acting less out of concern for local residents than for influential hotel owners, whom the company accuses of ‘price-gouging.’ Such sentiments are often shared by hosts. Imposing limits on short-term rentals, as Airbnb has done today in London and Amsterdam, caps the extent to which they can undercut the hotel industry.

What the OPEC Production Cut Will Really Mean for Oil Prices

Crude oil prices–and the shares of U.S. oil and gas companies–surged over 8% Wednesday as the Organization of Petroleum Exporting Countries (OPEC) agreed to cut its output by some 1.2 million barrels a day to end a global glut.

If fully implemented, the deal will effectively end the price war started by Saudi Arabia two years ago in its efforts to wrest market share back from U.S., a ploy that has wrecked the budgets of many OPEC members including Saudi itself.

Crucially, the deal is dependent on persuading major non-OPEC producers such as Russia to cut output too, by a total of 600,000 barrels a day. Moscow, having previously said it would only freeze production at current (record high) levels, has now committed to cut by 300,000 barrels a day, OPEC President and Qatari Energy Minister Mohammed Saleh al-Sada told a press conference in Vienna after the meeting.

Al-Sada said that Saudi Arabia would take the biggest hit, cutting by 486,000 barrels a day to just over 10 million. Reuters reported that Iran, Saudi’s biggest rival in the cartel, had agreed to freeze its output close to current levels, which would represent a major diplomatic coup for the Islamic Republic in the face of heavy Saudi pressure to share the pain.

“We believe it is very much achievable,” al-Sada said.

But the actual cut isn’t as big as OPEC would like to present it. The cartel has simply stopped counting the 750,000 barrels a day produced by Indonesia, on the grounds that it is no longer an oil exporter. And there is no way of knowing how Russia will measure its contribution yet. In the past it has merely chosen to defer planned output increases.

The exact production quotas are still to be published.

Shares in the biggest U.S. shale producers exploded on the deal, as the threat of a longer price war receded. EOG Resourceseog, Apache Corp spa, and Chesapeake Energychi all rose by over 8% on the news. Conventional heavyweights ExxonMobil xom, Chevroncvx, and Conocophillips cop also gained strongly, lifting the S&P 500 to a new record high. At midday, the benchmark futures contract for U.S. crude was up 8.5% to $49.08, which was a five-week high.

“I don’t think this means that we’re going back to a world of $100 oil or even $75 oil, but it does mean that we’re not going back to a world of $28 any time soon,” Andy Brogan, global oil and gas transaction leader at EY, told Fortune.

As a result, shale companies can be more confident about drilling, and banks can be more confident about lending to them, Brogan said. The key variable, he noted, will be how quickly, and how cost-effectively, the industry can do that–given that the carnage in the oil services sector since 2014 has “hollowed out” the supply chain.

If the cut sticks, then the International Energy Agency reckons that the world market could “move from surplus to deficit very quickly in 2017,” leading prices to rise sharply once the existing stock overhang is depleted.

The question is, though, will it stick? Or will a reviving shale industry simply enjoy a free ride on OPEC’s discipline?

“If you get to the next OPEC meeting and all that has happened is that shale has replaced the entire cut, then there is a risk that they’ll think again,” EY’s Brogan said.

Oil Prices Surge on Reports of a Big Output Cut by OPEC

Oil prices jumped more than 8% on Wednesday to a five-week high as newswires reported that the Organization of the Petroleum Exporting Countries had agreed its first oil output cuts since 2008.

An OPEC source told Reuters on Wednesday that the cartel, which produces one-third of the world’s oil, had firmed up an agreement in line with a tentative deal reached in Algiers in September. That would involve cutting output from a current level of around 33.6 million barrels a day to somewhere between 32.5 million and 33 million.

Bloomberg said the new ceiling would be at the lower end of that range, an effective cut of between 1.1 million and 1.2 million barrels a day from current levels.

Brent crude futures for delivery in January were up $4 a barrel, or 8.5%, at $51.32 a barrel by 0915 ET, recovering from a drop of nearly 4% on Tuesday and on course for their biggest one-day move in nine months. U.S. West Texas Intermediate (WTI) crude futures were $3.63 higher at $48.86 a barrel, a one-week high.

The volatility is acute because world markets are still badly oversupplied, and prices have edged up since September almost exclusively on the hope that OPEC would rein in output and end the price war that began in late 2014. Analysts at Goldman Sachs, Barclays, and ANZ had said oil prices would quickly fall to the low $40s a barrel if OPEC failed to cut output.

However, if the cut sticks, then the International Energy Agency reckons that the world market could “move from surplus to deficit very quickly in 2017”, leading prices to rise sharply once the existing stock overhang is depleted.

Traditionally, OPEC attaches great fanfare to its deals, keen to stress its unity and discipline. However, the same tradition also dictates that there is a great deal of devil in the details, and that some countries will invariably produce above their agreed ceiling in pursuit of a free ride. One crucial detail is the role of non-OPEC producers such as Russia. Bloomberg said the agreement foresaw a cut of 600,000 barrels a day by non-OPEC producers. However, Russia–the world’s largest producer–hasn’t said confirmed it will cut output at all, and OPEC has no way of forcing it to.

The first sign that the cut might not be quite as big as promised came as Reuters reported a source saying that Indonesia had been suspended from the cartel, and its production quota redistributed among other members. This arithmetical sleight-of-hand (Indonesia will continue to produce about 750,000 barrels a day, it just won’t be included in the OPEC figures), suggests that the effective cut in world oil supply could be much smaller than the one proclaimed.

OPEC ministers started their meeting at 0400 ET on Wednesday at its Vienna headquarters. A press conference is tentatively expected around 1000, Eastern time.

Here’s Why the Drop in Oil Prices Isn’t Over

Like a year ago, crude oil futures are tumbling again Tuesday as hopes for a cut in output from the Organization of Petroleum Exporting Countries (OPEC) fade due to entrenched differences between its most important members.

Analysts have warned that the global glut that drove prices to nine-year lows earlier this year could stretch well into next year if OPEC fails to deliver a cut, after raising expectations in recent weeks. And time is now running out. Ministers from the cartel’s members are due to meet in Vienna Wednesday and the positions are still far apart. Saudi Arabia’s oil minister, usually the decisive voice at OPEC meetings, isn’t even due to fly in until later Tuesday evening, according to Reuters.

The implications for the U.S. economy could be far-reaching. The shale boom that has made the U.S. much less dependent on imported oil is a major driver of local economies from Texas to North Dakota. The recovery in oil prices from a low of $27 a barrel in the first quarter has spurred a revival in drilling and associated services in recent months, which has lifted the broader economy. On Monday, the Federal Reserve Bank of Dallas reported that its gauge of general business activity returned to signaling expansion for the first time in nearly two years in November.

Of course, the markets for oil and refined products are always volatile ahead of OPEC’s ministerial meetings whenever there is a chance of a change in output levels. The cartel satisfies one-third of world oil demand, and therefore should have the ability to control, or at least nudge, prices.

But getting members to agree to a cut, or a certain policy, hasn’t been easy, particularly recently. Each country would have to sacrifice possible revenue (and most OPEC members have no other meaningful source of government revenue) at a time when low oil prices means revenue has been tight. What’s more, those sacrifices are even more difficult to agree to when non-OPEC members, such as the U.S. and Russia (the world’s biggest oil producer) end up by default among the beneficiaries of higher prices.

If Russia listens to anyone in OPEC, it is not the hard-pressed Algerians and Venezuelans (much as it values Venezuela’s anti-American geopolitical stance), but rather Iran, a major buyer of Russian nuclear technology and conventional military hardware, and its strategic ally in Syria, where both countries back the regime of Bashar al-Assad.

And Iran is not looking to cut. Bloomberg reported Monday that it is sticking to its demand to raise output to 3.975 million barrels a day, roughly the level it was producing before the 2008 crisis. But that is 50,000 barrels a day above what it claims to have produced in October (official figures may be slightly inflated, to create more leeway for ‘cuts’)

“The revival of Iran’s lost share in the oil market is the national will and demand of Iranian people,” Iranian news agency Shana quoted the country’s oil minister Bijan Zanganeh, who was due to arrive in Vienna later on Tuesday, as saying.

Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

With neither of its two biggest rivals willing to back down, Saudi Arabia had threatened at the weekend to revert to all-out price war.

As bad as that sounds, it’s possible that may not lead to plunging prices. The world economy is emerging from a soft spell, meaning that oil demand is likely to rise faster next year. In fact, the Organization for Economic Cooperation and Development predicts that the global gross domestic product will expand 3.3% next year, up from 2.9% this year, partly in response to reflationary policies promised by President-elect Donald Trump.

However, some think even Trump won’t be enough to keep oil prices up, if OPEC doesn’t start to play nice. Morgan Stanley and Macquarie, for two, have said oil prices will correct sharply if OPEC fails to reach a deal, potentially going as low as $35. Back down we go.